In the past year a number of senior executives of large public companies, including CEO’s, have been fired or were forced to resign for sexual harassment or misconduct. A year ago, Google said that 48 of its employees had been terminated for sexual misconduct. The CEO’s of Barnes & Noble, HP and Warner Brothers were all in the news for similar incidents. The latest is the CEO of McDonald’s who recently resigned over an affair with an employee. While the relationship was consensual, the company’s board said this violated company policies and demonstrated poor judgement.
The board opted to terminate without cause, and while the CEO will receive 26 weeks of severance and pro-rated bonuses, the romance cost the man his job and his annual salary which was $16-million US.
This is an interesting case because in no way did the CEO lose his job for poor performance, at least, as far as the numbers are concerned. In fact, he had delivered solid financial numbers resulting in company shares roughly doubling in value since he took over. He was also credited with many innovative, non-financial, achievements.
Few people will feel sorry for an executive who receives such a handsome severance, a pro-rated bonus, and on top of all that still gets to keep his stock options. Still, it is sad to see capable and smart executives make such egregious errors to the point where they must leave.
What can we learn from this story? Here are two key points.
The first lesson concerns the company’s board and how swift it was to decide to terminate. It was also prepared with succession planning. The removal of the CEO required several moves of senior executives; the executive in charge of North America had to move into the CEO position and board, the executive in charge of international operations had to take charge of North America, and the two senior positions had to be filled as well.
Also, an effective communication campaign was promptly orchestrated both within the company and publicly. McDonald’s employs more than 375,000 people. It has more than 38,000 locations in 100 countries around the world, and its market capitalization is over $130-billion US. These numbers give you a perspective for the size of this ‘ship’ and it’s certainly no rowboat; think more along the lines of a big tanker or cruise ship. But my point is the board had its act together.
The second lesson from this story is about why it happened and how to avoid such an outcome in the future.
I enjoyed a career of more than 23 years leading four companies in Italy, Brazil, France and Canada for a multi-million-dollar, global organization. I have also had a second career, again over 23 years, as a management consultant. These careers taught me how to avoid falling – pardon the pun – into the ‘wrong bed,’ and any senior executive or manager who is leading a company or department should pay heed.
The fact is temptations are part of life and all of us get tempted one way or another. We are tempted to lie, to steal, to envy, to be jealous, and to get romantic. The key is to take a stand before the temptation presents itself.
Indeed, if you wait to decide what to do only when you are tempted, you assume high risk because emotions may take over the brain. It’s a far better idea to set guidelines ahead of the game. Think of guardrails on a highway. They were installed to prevent accidents. People need guardrails too, so here are some helpful guardrails for executives.
- If you must work late at the office, it’s best to do so in groups and not one-on-one.
- Breakfast and lunch are okay one-on-one, but you should really think it over when it comes to dinner.
- One-on-one may not be a good idea when driving home, especially after work or at night. A taxi, limousine or Uber can do a better job!
- Events outside the office can be great for team building but remember that a team is defined as three people or more. Not two.
There are other simple things you can do as well. For example, make sure you display family photos in your office including your spouse, children, houses, pets, etc. They help keep you thinking about your priorities and are also invites to good story telling. Also remember that these rules don’t apply only to men. They apply to anyone.
While these points are not bullet-proof, they will mitigate the risk and provide good protection in serving as your guardrail.